Following the Venezuelan decision to revalue its Bolivar to lose 95% of its value, bitcoin trading has risen to the highest levels on record. According to data from Coin Dance which tracks bitcoin trade volume, bitcoin trading is at all-time highs on P2P platform Local Bitcoins.
In the weeks beginning the 18th and 25th of August, bitcoin trading was near 300,000,000 Bolivars (Ves) each. This figure was only 17,000,000 in early April and has been rapidly increasing since. This week will most likely be the biggest yet.
What is the Sovereign Bolivar?
The Sovereign Bolivar is a fiat currency linked to the Petro national cryptocurrency that was released in February 2018 to deal with the ongoing Venezuelan economic crisis. The Petro is itself supposedly backed by oil reserves. But by all legitimate accounts, the oil reserves backing the Petro do not exist, and the Petro itself is not used by anybody in the region. In other words, the Sovereign Bolivar is linked to two ‘assets’ which do not exist outside of state-mandated propaganda. It is a desperate attempt to boost an economy that has crumbled, and it a fake fiat linked to imaginary crypto backed by nothing.
According to the BBC, Venezuela has been paralyzed following the launch of the Sovereign Bolivar which resulted in a huge Bolivar devaluation. Thousands of businesses closed and many workers failed to show up. Critics have said it will make the crisis worse. This week will likely see further record bitcoin trading highs. President Maduro recently ordered banks to accept the Petro cryptocurrency to bolster the economy, yet there is little hope of stabilizing the economy at this late stage through traditional means.
Bitcoin trading – the silver lining
However, there is a positive side to these kinds of crises. They really pave the way for truly decentralized currencies, and usually, a meltdown is necessary to serve as a catalyst for smarter choices. Venezuela could become the first country on the planet where a majority of people use decentralized currencies as a primary means of exchange, as compared to empty bitcoin trade volume by traders and algorithms.
Other cryptocurrencies are also rising in the area. Dash is now a favorite in Venezuela, as it has multiple merchant integration products as well as inherent privacy features which are going to be much sought after in totalitarian regimes.
Venezuela is actually now the second largest market for the Dash cryptocurrency. Reddit users have also contributed the Nano cryptocurrency to purchase food. The people of Venezuela do not have a currency – It is the perfect market for crypto adoption, especially without any intervention of the money supply through centralized actors.
The rise in Bitcoin trading makes perfect sense as it is the ideal antidote to centralized financial crises which are usually tied intrinsically to oil. Hopefully, other nations can take note and make a peaceful transition before a crisis forces everybody to make the shift in sub-optimal conditions.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.